U.S. Brewing industry profitability: A simultaneous determination of structure, conduct, and performance

Sanjib Bhuyan, Michael McXafferty

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

The U.S. brewing industry plays an important role in the U.S. economy. Although the number of firms has increased in the industry, the industry overall has remained very concentrated, with a three-firm concentration ratio of 81% in 2000 (Stack 2000). Increasing concentration in the U.S brewing industry raises public policy concerns due to the potential impact of concentration on market performance and efficiency, for example, the recent decision by the U.S. Department of Justice (DOJ) to block the proposed merger between AB-InBev and Mexico's Groupo Modelo. Employing an improved version of the structure-conduct-performance (SCP) approach, we examine the relationship between concentration and profitability in the U.S. brewing industry. Our results support the hypothesis that market concentration impacts market performance. We, however, did not address the issue of collusive conduct or market power explicitly.

Original languageEnglish (US)
Pages (from-to)139-150
Number of pages12
JournalJournal of Agricultural and Food Industrial Organization
Volume11
Issue number1
DOIs
StatePublished - 2013

All Science Journal Classification (ASJC) codes

  • Food Science
  • Business, Management and Accounting(all)
  • Economics and Econometrics

Keywords

  • Brewing industry
  • Market power
  • Oligopoly
  • Profitability
  • Scp

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